In accounting terminology, the term Net Profit refers to what is left of the company’s revenue after the company has paid out all operating expenses and assumed all losses for the reporting period. Net Profit is also known as the company’s Net Income or “bottom line”.
For example, Net Profit makes up the lowest entry on the balance sheet, after all expenses and other payments have been deducted from the revenues of the company. This is why Net Profit is also known as the bottom line. The basic formula for Net Profit consists of the following: Net Profit or Net Loss = Total Revenues – Total Expenses. Depending on the accounting methods, Net Profit can vary considerably because of non-cash expenses such as depreciation and amortization. Net Profit can vary from company to company and from industry to industry. Many companies try to avoid paying out too much in taxes, so they purposely keep Net Profit low.